Approximately 1,120 of Stripe’s 8,000 employees will be laid off, representing 14% of the company’s workforce.
The most recent round of layoffs comes after a series of workforce reductions in the fintech industry, including Brex’s announcement last month that it was laying off 11% of its staff and Chime’s announcement yesterday that 12% of its staff will be let go.
In an online memo, Stripe CEO Patrick Collison provided a familiar explanation for the most recent layoffs: a massive hiring drive motivated by the global pandemic-driven surge in e-commerce, a period of significant growth, followed by an economic downturn marked by inflation, higher interest rates, and other macroeconomic difficulties.
We overhired for the environment we’re in, and it hurts us that we can’t give the impacted people the Stripe experience we had planned for, Collison stated.
Even if there is never a perfect method to handle a round of layoffs this size, Collison’s announcement is noteworthy for how much he accepts responsibility for the problem, citing two particular errors the company’s leadership made. He stated:
In making these changes, you might reasonably wonder whether Stripe’s leadership made some errors of judgment. We’d go further than that. In our view, we made two very consequential mistakes, and we want to highlight them here since they’re important:
We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.
We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.
It’s possible that the news from today won’t come as a great surprise. While Stripe’s eagerly anticipated IPO is still up in the air, reports suggest that the company’s internal valuation has fallen 28% from $95 billion to roughly $74 billion. Additionally, TechCrunch was informed in August of a lesser round of layoffs at Stripe that affected an estimated 45–55 employees at TaxJar, a tax compliance business it had previously bought.
Regarding severance, Collison stated that everyone affected will receive at least 14 weeks’ compensation, depending on the length of time spent at the company. The annual incentive for 2022 will be paid in full by Stripe regardless of when each person quits, he added, but it will be prorated if they simply started this year. Additionally, he stated that Stripe will give healthcare coverage for six months after each left and that any unused paid time off (PTO) would be paid.